Rhode Island Non-Compete Agreements: Five Years Under the Act

When the Rhode Island Noncompetition Agreement Act took effect in January 2020, the practical question for employers was not whether it would invalidate existing agreements — most did survive — but how aggressively courts would read the statute's carve-outs for low-wage workers, healthcare employees, and anyone under the age of eighteen. Five years of decisions later, the answer is: narrowly on enforcement, broadly on the exceptions.

The Superior Court has consistently struck covenants as to any employee earning at or below 250% of the federal poverty level. We have seen several cases where an otherwise reasonable eighteen-month covenant was voided in full because the underlying employment fell below the threshold at the time the agreement was signed, even when the employee's compensation had since grown substantially. The statutory language is about the status of the worker at signing, and courts have declined to read a dynamic test into it.

Conversely, for employees clearly above the threshold, the courts have been willing to enforce geographic restrictions and reasonable duration (generally twelve months or less) when the employer can articulate a protectable interest beyond customer goodwill — typically confidential pricing, proprietary methodology, or active deal pipelines. Customer non-solicitation provisions, notably, have fared substantially better than broad non-competes and are now the primary tool in well-drafted agreements.

The most common drafting error we see in 2026 remains the boilerplate geographic scope. "Anywhere the Company does business" was a viable formulation pre-Act and is now a reliable way to have the provision struck as overbroad. Tailored, enumerated territory clauses — counties, states, or specifically-named accounts — hold up far more reliably.

For employers with workforces that straddle Rhode Island and Massachusetts, the analysis is further complicated by Massachusetts's own 2018 Noncompetition Agreement Act, which imposes a garden-leave or equivalent consideration requirement. We routinely draft agreements with state-specific riders and a choice-of-law provision that defaults to the employee's principal place of work. Attempting to apply a single agreement uniformly across both jurisdictions is, in our experience, the single most common reason a portfolio of covenants fails when tested.

Counsel to founders and senior executives negotiating restrictive covenants in 2026 should focus less on the duration — twelve months is now the de facto ceiling that will survive review — and more on the definition of "competitor," the carve-outs for passive investment, and the interaction with any earnout or deferred compensation. We are happy to review specific agreements with clients in either jurisdiction.